Tax exemption in the UK for additional income
Almost everyone decides to sell something on eBay or other well-known classifieds websites from time to time.
It sometimes happens that we sell a few things and sometimes it can be a few hundred pounds. And the question arises whether to pay taxes or not.
Of course, taxes in the UK are not great, but hmm …. It’s a pity to dispose of your own money.
Fortunately, the tax exemption in the UK, which up to 1000 pounds (gross turnover) exempts you from paying tax. It may also be a small trade in the form of selling some kind of handicrafts. It also applies to people who earn extra money as babysitters or gardeners.
It should be mentioned that if you are registered in self-assessment, you should report such income. And if not, you don’t even have to declare it.
You can find more information on government websites. All you need to do is write in the google: tax-free allowance on trading income
Of course, as the name suggests, these 1000 pounds are also exempt from rental income, for example, from renting a room. This especially concerns people renting rooms in their homes through such websites as Airbnb, Homestay or 9flats.
To learn more about the above-mentioned websites, it is necessary to read the article, in which I described what to do when hotels are expensive
The Self Assessment is registered only when you exceed 1000 pounds of income. Even this applies to people who decide to run a business, but their turnover will not be greater than £ 1000, it is also not necessary to register for Self Assessment.
Tax exemption in the UK only for those who know something about it
So the tax exemption in the UK is quite pleasant for our wallets. You can start trading legally on eBay and don’t be afraid of fiscal control if your turnover doesn’t exceed 1000 pounds.
What happens if I am already registered in a self assessment?
Then, according to the law, the tax exemption (self emploment) should be completed and income should be given in the income section, for example, from the sale of handicrafts and the same value in the expenses section as „trading allowances”.
What happens if the sales value exceeds £ 1000
Then it is worth deducting actual expenses related to earning this money (ex. purchase of products related to the performance of some products, commission for ebay or airbnb, paypal, etc.)
Therefore, if your sale, for example on ebay, is less than 1000 pounds, it is worth considering abstaining from trading or registering yourself as an employee.
Tax exemptions in the UK give big savings, so it’s worth checking what are the other UK allowances.
Of course, there are also exceptions.
You can’t get a discount if you trade as a partnership. In this case, it is better to act alone.
Also, if you sell something to your company, you can’t receive tax exemption in the UK. Even if you sell only one item, you can’t use the tax-free trading allowance.
It is worth adding that the UK tax credit applies to both trade and property income and the amounts are combined. So the allowance goes back to 2000 pounds.
However, remember, if you already use the rent a room scheme, you can’t combine tax exemptions with each other.
Did you know that such tax exemption exists in the UK?
- Tax-free allowances on property and trading income: www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
- Rent a room in your home: www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme